Global Alternatives Survey 2013

Transcription

1 Global Alternatives Survey 2013 Including the top 100 alternative investment managers Including the top alternative asset manager rankings July Towers Watson. All rights reserved.

2 Survey statistics 578 entries are included in the survey. The majority of the data (533 entries) comes directly from investment managers with the remainder coming from publicly available sources. This includes the Billion Dollar Club list, published by Hedge Fund Intelligence. Manager Type Investor Type FoHF Direct Hedge Funds* Private Equity FoF Direct Private Equity Funds* USD billion Direct Real Estate Funds Direct Commodities Funds Direct Infrastructure Funds Total Top 100 total assets , ,108.4 Top 100 Pension Fund assets Top 25 Insurance Company assets Top 25 Sovereign Wealth Fund assets Top 25 Endowment & Foundation assets Top 25 Fund of Funds assets Top 25 Wealth Manager assets , Top 25 Bank assets * Figures for some of these managers were obtained from publicly available sources and using data derived from the Global Billion Dollar Club, published by HedgeFund Intelligence 2

3 Sections Section I Asset Class Trends Hedge Funds Private Equity Real Estate Infrastructure Commodities Section II Top 100 alternative asset managers by AuM The top 100 alternative asset managers globally by total assets under management (AuM) 3

4 Sections Section III Analysis of top alternative asset managers by investor type Top 100 alternative asset managers by Pension Fund assets Top 25 alternative asset managers by Insurance Company assets Top 25 alternative asset managers by Sovereign Wealth Fund assets Top 25 alternative asset managers by Endowment & Foundation assets Top 25 alternative asset managers by Fund of Funds assets Top 25 alternative asset managers by Wealth Manager assets Top 25 alternative asset managers by Bank assets Section IV Total universe Analysis of all asset managers Complete ranking of all asset managers 4

5 Section 1 Asset Class Trends

6 Asset Class Trends Hedge Funds - Key Trends The evolving hedge fund landscape The FoHF industry continues to adjust to the new normal, with FoHFs increasingly working with investors in some form of customised or bespoke manner. Continuing downward pressure on the FoHF fees has resulted in meaningful reduction of the average manager fee rates, although the total fee burden for institutional investors remains significant. Institutional investors continue to become more discerning about what they want from their hedge fund allocation, which is low correlation to traditional markets, greater transparency, appropriate liquidity, alignment and appropriate fees. Hedge fund managers are increasingly accommodative of institutional investors requirements, such that there is much less of a take it or leave it attitude in dialogue with investors. Future outlook In our view, there are only a small number of FoHFs that offer a credible capability so we expect consolidation in the sector to continue. This could take the form of these firms seeking partnerships or ceding ownership to a larger parent organisation that can offer broader alternative investment and global distribution capabilities. We expect continued downward pressure on fees with investors taking advantage of their improved bargaining position, strengthened in part by being long-term investors in the asset class. While the larger managers across all hedge fund strategies are generally perceived to be safer from a business risk perspective, investors are also increasingly allocating in an informed manner to more modestly sized managers that have a proven record of alpha generation. Managed accounts continue to be a topic of discussion but in most cases the establishment of a specific share class in an existing commingled fund offers an attractive method of allocation, in particular as the managers tend to have the bulk of their net worth invested in the same vehicle. Investors continue to view the hedge fund portfolio as a de-correlating and diversifying allocation and we can expect strategies that offer very low correlation characteristics, as well as beta, to have prominence. More prominent regulatory scrutiny is likely to continue in the foreseeable future. 6

7 Asset Class Trends Private Equity - Key Trends The evolving private equity landscape Funds of funds continue to grapple with the evolving landscape in which the appetite for traditional commingled fund of funds solutions is diminishing further. These managers are now focused on separate accounts and co-investments, increasing the complexity of their business. Only a few fund of funds organisations with significant scale have the ability to adapt to the evolving business model so we continue to see consolidation in the industry. Fundraising in private equity remains a challenge. The market has become increasingly bifurcated with those managers boasting exceptional short- and long-term track records raising capital successfully while others struggle. This is exacerbated by investors appetite to reduce the number of relationships they maintain. Large sophisticated investors with significant capital and governance budget to deploy in private equity are increasingly co-investing alongside their favoured managers. Investors are focusing more on managing their illiquid investments holistically, meaning many private equity managers are competing for capital with other illiquid strategies such as private debt, infrastructure and real estate. Future outlook We expect continued downward pressure on fees with investors taking advantage of their improved bargaining position. One mechanism to achieve this goal will be more strategic partnerships whereby large investors provide meaningful capital commitments across a manager s pool of products in return for some form of cost reduction. We also expect the secondary market to mature and grow in prominence, increasing the liquidity of the asset class. In 3-5 years, we expect these trends to change the nature of the manager / investor relationship with increased implementation options providing more flexibility for sophisticated investors. Primary fund investing will become just one tool that large sophisticated investors use to get their private equity exposure. This will be supplemented with increased co-investing, secondary activity and strategic partnerships for investors with the scale and governance to successfully execute such strategies. 7

8 Asset Class Trends Real Estate - Key Trends The evolving real estate landscape Markets are increasingly polarised between prime and secondary locations. In the former investor interest is high, rental growth is strong and yields are low; in the latter tenant demand is low and yields are high. This pattern holds for many regions around the world with the yield spread between prime and secondary markets being at multi-year highs. In the seemingly improving US economy, there are early signs that investors are moving into secondary locations in search for additional yield. Fundraising in real estate remains a challenge. The market has become bifurcated where managers with good track records are raising capital successfully whilst others are struggling. We have seen a few managers withdrawing from the real estate sector in recent years or altering their product offering. Fees have been declining since the global financial crisis, particularly in Europe where fundraising has been most difficult, and several highly regarded managers have introduced hard hurdles as opposed to preferred return (with catch-up) performance fee structures. Funds of funds and multi-managers continue to grapple with reduced investor demand and problem legacy funds. These managers are increasingly focused on co-investments and joint ventures to reduce costs and increase control. As bond yields have fallen in recent years, investor appetite for real estate has been increasing. In particular there has been growing interest in secure income real estate strategies, such as long lease property and senior real estate debt. Investors are attracted to stable income streams, asset backing and yield spreads over investment grade credit. Future outlook We expect to see continued downward pressure on fees and more thoughtful fee structures for different real estate strategies. We also expect increased investor interest in 1) co-investments and joint ventures, 2) non-domestic real estate allocations and non-traditional sectors (eg, student housing, data centres), 3) secure income real estate (especially if government bond yields remain low), 4) more granular consideration of real estate strategies between secure income, traditional core and leveraged real estate strategies; and 5) sustainability ingrained property strategies. 8

9 Asset Class Trends Infrastructure - Key Trends The evolving infrastructure landscape Since the early 2000s, private infrastructure investing has gathered significant interests from institutional investors. This is reflected in the large size of some infrastructure fund management organisations included in this survey. During the last twelve months the largest institutional investors globally have been considering alternative methods for accessing this asset class. A growing trend is for the largest investors in Canada, Asia and Australia to access deals either directly or by co-investing with investment managers. Future outlook Institutional investors appetite for infrastructure assets and their core characteristics (stable yield and inflation-linkage to name a few) continues to be strong and this should drive up total assets under management in infrastructure. One of the trends seen during 2012 and into 2013 has been the winner funds dominating, creating virtuous cycles of successful and rapid capital raisings, while other funds have struggled to raise any capital. We would expect to see those funds that can demonstrate a comparative advantage continuing to be attractive investments, with consolidation elsewhere in the industry. There has been significant discussion about the role that institutional investors may play in funding governmentsupported infrastructure projects globally. In economies where government budgets are heavily constrained, it is vital that those governments provide sufficient incentives for private capital to help address funding gaps. Renewed thinking about regulatory frameworks and risk transfer between the public and private sectors will significantly impact the amount of capital that ultimately gets invested in infrastructure assets around the world. 9

10 Asset Class Trends Commodities - Key Trends The evolving commodity landscape Underinvestment in natural resources and economic growth in China have supported a long-term upward trend in some commodity prices since the 1990s. Throughout the global financial crisis this trend has persisted with the quantitative easing programmes within the US and Europe helping to perpetuate it. However, more recent trends are less positive; there have been large price falls in some markets, including gold, and the high correlation with equities has raised concerns about the role of commodities in a diversified portfolio. Future outlook Investor sentiment towards commodities has declined more recently and investment in commodities has been sluggish. It could be some time until we see any significant increases. However, it is becoming clear that opportunities are starting to emerge as correlations decline. In terms of accessing commodities, the more dynamic approaches offered in hedge fund structures are gaining popularity, although there continues to be interest in passive beta-focused approaches. The more traditional beta and enhanced strategies are known to be structurally challenged, and investors are now looking for smarter ways to access them through smart beta products. 10

11 Section 2 Towers Watson / Financial Times Top 100 Alternative Asset Managers by Total AuM How to read this section This section shows the top 100 managers ranked by total AuM. Each manager is counted separately in each individual asset class, so they may appear multiple times if their AuM are large in more than one asset class. These top 100 are analysed in relation to the regions they invest in and in relation to assets managed by investor type.

12 Top 100 Alternative Asset Managers Executive summary Top 100 Alternative Asset Managers The top 100 alternative asset managers, ranked by total AuM, managed USD 3,108.4 bn on behalf of their investors in The largest block of alternative assets is managed in Direct Real Estate Funds followed by Direct Private Equity Funds, Direct Hedge Funds, Private Equity Fund of Funds, Funds of Hedge Funds, Direct Infrastructure Funds and Direct Commodities Funds. Pension Funds are the largest investor in alternative assets (over 36%), among the top 100 alternative asset managers, followed by Wealth Managers*, Insurance Companies, Sovereign Wealth Funds, Banks, Fund of Funds and Endowments and Foundations. In terms of where the assets are invested, North America accounts for the largest amount of alternative assets, followed by Europe and Asia Pacific. This is the first year we are including a breakdown by Wealth Managers, Fund of Funds and Banks in our analysis. * Wealth managers are defined as: high net worth individuals, family offices, asset managers, corporate investors, government agencies, private companies and investment companies. 12

13 Top 100 Alternative Asset Managers Top 100 Alternative Asset Managers 6% 20% 10% 23% 34% 4% 4% Funds of Hedge Funds Direct Hedge Funds Private Equity FoF Direct Private Equity Funds Direct Real Estate Funds Direct Commodities Funds Direct Infrastructure Funds Asset class Total assets Average Smallest Largest USD million Number of funds Funds of Hedge Funds 176, , , , Direct Hedge Funds 612, , , , Private Equity FoF 315, , , , Direct Private Equity Funds 716, , , , Direct Real Estate Funds 1,042, , , , Direct Commodities Funds 118, , , , Direct Infrastructure Funds 127, , , , Total 3,108, , , , * Proportions might not sum up to 100% due to rounding 13

14 Top 100 Alternative Asset Managers Distribution by Investor Type 36% 9% 6% 2% 3% 19% 5% 19% Pension Fund Insurance Company Sovereign Wealth Fund Endowment and Foundation Fund of Funds Wealth Manager Bank Other Asset class Total assets Average Smallest Largest Number of funds USD million Pension Fund 1,130, , , Insurance Company 277, , , Sovereign Wealth Fund 185, , , Endowment and Foundation 76, , , Fund of Funds 108, , , Wealth Manager 579, , , Bank 144, , , * The category Other has been included for assets that could not be allocated into the survey s categories, it has not been analysed in detail. ** Proportions might not sum up to 100% due to rounding 14

15 Top 100 Alternative Asset Managers Distribution by Region and Asset Class Asset managers were requested to state where their assets are invested. Funds of Hedge Funds 30% 41% 18% 11% Direct Hedge Funds 28% 32% 10% 31% Private Equity FoF 30% 60% 8% 3% Direct Private Equity Funds 31% 57% 10% 2% Direct Real Estate Funds 41% 45% 8% 6% Direct Infrastructure Funds 56% 28% 14% 2% Total 37% 46% 10% 7% Europe North America Asia Pacific Other * Direct Commodities Fund managers did not present a regional breakdown ** Some proportions might not sum up to100% due to rounding 15

16 Top 100 Alternative Asset Managers Comparison Total assets for the top 100 alternative asset managers decreased marginally from USD 3,136.5 bn in 2011 to USD 3,108.4 bn in 2012 (under 1%). An analysis of the assets of those managers that also appeared in this ranking in 2011 (86 managers) showed an increase of around 1%. The split by asset class is largely similar to last year with a small gain for Private Equity FoF, Direct Private Equity and Direct Commodities at the expense of Direct Hedge Funds and Direct Real Estate % 21% 9% 22% 35% 3% 4% % 20% 10% 23% 34% 4% 4% Funds of Hedge Funds Direct Hedge Funds Private Equity FoF Direct Private Equity Funds Direct Real Estate Funds Direct Commodities Funds Direct Infrastructure Funds 16

17 Top 100 Alternative Asset Managers Comparison Funds of Hedge Funds Funds of Hedge Fund assets account for 6% of all assets managed by the top 100 managers. Assets of those managers that also appeared in the 2011 top 100 ranking increased by 6%. Direct Hedge Funds Assets of those managers that also appeared in the 2011 top 100 ranking increased by over 4%. There are 25 Direct Hedge Fund managers in the top 100 ranking. Private Equity FoF Direct Private Equity Funds Direct Real Estate Funds Assets of those managers that also appeared in the 2011 top 100 ranking increased by nearly 4%. 60% of these assets are invested in North America, with 30% being invested in Europe. Assets of those managers that also appeared in the 2011 top 100 ranking increased by 3%. 88% of assets are invested in North America and Europe. Assets of those managers that also appeared in the 2011 top 100 ranking declined by over 4%; the only asset class which had such a decline, measured on this basis. Direct Real Estate remains the largest asset class having over one third of all assets managed by the top 100 asset managers. Direct Commodities Funds Assets for the two managers that also both appeared in the 2011 top 100 ranking increased by a modest 1%. Direct Infrastructure Funds Assets for the one manager that also appeared in the 2011 top 100 ranking increased by 7%. 17

18 Top 100 Alternative Asset Managers Top 100 ranking ranked by Total AuM * Figures obtained from publicly available sources and data derived from the Global Billion Dollar Club, published by HedgeFund Intelligence Position Name of parent organisation Main country of domicile Total AuM (USD million) Asset Class 1 Macquarie Group Australia 94, Direct Infrastructure Funds 2 Bridgewater Associates United States 84, Direct Hedge Funds 3 CBRE Global Investors United States 80, Direct Real Estate Funds 4 BlackRock United Kingdom 74, Direct Commodities Funds 5 Goldman Sachs & Co United States 68, Direct Private Equity Funds 6 AXA Real Estate France 65, Direct Real Estate Funds 7 Brookfield Asset Management Canada 65, Direct Real Estate Funds 8 UBS Global Asset Management United Kingdom 65, Direct Real Estate Funds 9 Blackstone Capital Parters United States 57, Direct Private Equity Funds 10 TPG Capital United States 54, Direct Private Equity Funds 11 The Carlyle Group* United States 53, Direct Private Equity Funds 12 Blackstone Real Estate Partners United States 50, Direct Real Estate Funds 13 Deutsche Asset & Wealth Management United States 48, Direct Real Estate Funds 14 LaSalle Investment Management United States 47, Direct Real Estate Funds 15 Kohlberg Kravis Roberts United States 45, Direct Private Equity Funds 16 Blackstone Alternative Asset Management United States 44, Funds of Hedge Funds 17 AlpInvest Partners The Netherlands 44, Private Equity FoF 18 Credit Suisse Asset Management United States 41, Direct Real Estate Funds 19 Morgan Stanley United States 41, Direct Real Estate Funds 20 Oaktree Capital Management United States 41, Direct Private Equity Funds 21 Cornerstone Real Estate Advisers United States 41, Direct Real Estate Funds 22 Brevan Howard United Kingdom 39, Direct Hedge Funds 23 Goldman Sachs Asset Management United States 39, Private Equity FoF 24 Warburg Pincus United States 38, Direct Private Equity Funds 25 Prudential Real Estate Investors United States 38, Direct Real Estate Funds 18

19 Top 100 Alternative Asset Managers Top 100 ranking ranked by Total AuM * Figures obtained from publicly available sources and data derived from the Global Billion Dollar Club, published by HedgeFund Intelligence Position Name of parent organisation Main country of domicile Total AuM (USD million) Asset Class 26 Apollo Global Management United States 37, Direct Private Equity Funds 27 Aviva Investors United Kingdom 37, Direct Real Estate Funds 28 Bain Capital United States 37, Direct Private Equity Funds 29 Principal Global Investors United States 36, Direct Real Estate Funds 30 Apax Partners United Kingdom 35, Direct Private Equity Funds 31 Advent International United States 35, Direct Private Equity Funds 32 BlueCrest Capital Management United Kingdom 35, Direct Hedge Funds 33 AEW Capital Management United States 34, Direct Real Estate Funds 34 Riverstone Holdings United States 34, Direct Private Equity Funds 35 J.P. Morgan Asset Management United States 34, Direct Real Estate Funds 36 TIAA-CREF United States 32, Direct Real Estate Funds 37 HarbourVest Partners United States 32, Private Equity FoF 38 Och-Ziff Capital Management Group* United States 31, Direct Hedge Funds 39 Invesco United States 30, Direct Real Estate Funds 40 CVC Capital Partners Luxembourg 30, Direct Private Equity Funds 41 J. P. Morgan Asset Management* United States 29, Direct Hedge Funds 42 PIMCO United States 28, Direct Commodities Funds 43 Credit Suisse Asset Management United States 27, Private Equity FoF 44 UBS Global Asset Management United Kingdom 27, Funds of Hedge Funds 45 Union Investment Germany 27, Direct Real Estate Funds 46 Baupost Group* United States 26, Direct Hedge Funds 47 BlackRock United Kingdom 26, Direct Hedge Funds 48 M&G Investments United Kingdom 26, Direct Real Estate Funds 49 Aberdeen Asset Management United Kingdom 26, Direct Real Estate Funds 50 Heitman United States 26, Direct Real Estate Funds 19

20 Top 100 Alternative Asset Managers Top 100 ranking ranked by Total AuM * Figures obtained from publicly available sources and data derived from the Global Billion Dollar Club, published by HedgeFund Intelligence Position Name of parent organisation Main country of domicile Total AuM (USD million) Asset Class 51 Winton Capital Management United Kingdom 25, Direct Hedge Funds 52 Adage Capital Management* United States 25, Direct Hedge Funds 53 Providence Equity Partners United States 24, Direct Private Equity Funds 54 Partners Group Switzerland 24, Private Equity FoF 55 The Permal Group United States 24, Funds of Hedge Funds 56 Hamilton Lane Advisors United States 23, Private Equity FoF 57 J.P. Morgan Asset Management United States 23, Private Equity FoF 58 Pantheon United Kingdom 23, Private Equity FoF 59 Silver Lake* United States 23, Direct Private Equity Funds 60 Goldman Sachs Asset Management United States 22, Funds of Hedge Funds 61 AMP Capital Investors Australia 22, Direct Real Estate Funds 62 HSBC Holdings United Kingdom 22, Direct Hedge Funds 63 AXA Private Equity France 22, Private Equity FoF 64 Grosvenor Capital Management United States 22, Funds of Hedge Funds 65 Credit Suisse Asset Management United States 22, Direct Hedge Funds 66 Elliott Management Corporation* United States 21, Direct Hedge Funds 67 Henderson Global Investors United Kingdom 20, Direct Real Estate Funds 68 AQR Capital Management United States 20, Direct Hedge Funds 69 EQT Private Equity Funds United Kingdom 20, Direct Private Equity Funds 70 LGT Capital Partners Switzerland 19, Private Equity FoF 71 D. E. Shaw Group United States 19, Direct Hedge Funds 72 Davidson Kempner Advisers* United States 18, Direct Hedge Funds 73 Farallon Capital Management* United States 18, Direct Hedge Funds 74 Bentall Kennedy Canada 18, Direct Real Estate Funds 75 BlackRock United Kingdom 18, Funds of Hedge Funds 20

21 Top 100 Alternative Asset Managers Top 100 ranking ranked by Total AuM * Figures obtained from publicly available sources and data derived from the Global Billion Dollar Club, published by HedgeFund Intelligence Position Name of parent organisation Main country of domicile Total AuM (USD million) Asset Class 76 Adams Street Partners United States 17, Private Equity FoF 77 Paulson & Co.* United States 17, Direct Hedge Funds 78 King Street Capital Management United States 17, Direct Hedge Funds 79 BNP Paribas Real Estate France 17, Direct Real Estate Funds 80 Clarion Partners United States 17, Direct Real Estate Funds 81 Deutsche Asset & Wealth Management United Kingdom 17, Direct Infrastructure Funds 82 GoldenTree Asset Management United States 17, Direct Hedge Funds 83 Millennium Management United States 17, Direct Hedge Funds 84 General Atlantic* United States 17, Direct Private Equity Funds 85 BC Partners United Kingdom 16, Direct Private Equity Funds 86 Financial Risk Management United Kingdom 16, Funds of Hedge Funds 87 Cinven United Kingdom 16, Direct Private Equity Funds 88 Standard Life Investments United Kingdom 16, Direct Real Estate Funds 89 Capital Dynamics Switzerland 16, Private Equity FoF 90 Hines United States 16, Direct Real Estate Funds 91 Legal & General Investment Management United Kingdom 16, Direct Real Estate Funds 92 Viking Global Investors* United States 16, Direct Hedge Funds 93 Gresham Investment Management United States 15, Direct Commodities Funds 94 First Reserve United States 15, Direct Private Equity Funds 95 Global Infrastructure Partners United States 15, Direct Infrastructure Funds 96 Man United Kingdom 15, Direct Hedge Funds 97 SAC Capital Advisors* United States 15, Direct Hedge Funds 98 Leonard Green* United States 15, Direct Private Equity Funds 99 Goldman Sachs Asset Management United States 14, Direct Hedge Funds 100 Canyon Capital Advisors United States 14, Direct Hedge Funds Total 3,108,

22 Section 3 Towers Watson / Financial Times Top Alternative Asset Managers by Investor Type A. Top 100 Alternative Asset Managers by Pension Fund Assets B. Top 25 Alternative Asset Managers by Insurance Company Assets C. Top 25 Alternative Asset Managers by Sovereign Wealth Fund Assets D. Top 25 Alternative Asset Managers by Endowment and Foundation Assets E. Top 25 Alternative Asset Managers by Fund of Funds Assets F. Top 25 Alternative Asset Managers by Wealth Manager Assets G. Top 25 Alternative Asset Managers by Bank Assets How to read this section This section shows the top 100/25 managers ranked by alternative assets, managed on behalf of the above seven investor types.

23 Section 3.A Top 100 Alternative Asset Managers by Pension Fund Assets

24 Top 100 Alternative Asset Managers by Pension Fund Assets Pension Fund Insights Evolving alternatives landscape While many pension funds have built up significant exposure to real estate in the past, they have not been early investors in other alternative assets, like some endowments and foundations. However, this has changed in the last decade and pension funds now represent the most significant source of capital for investment managers of alternative assets, particularly in private equity and hedge funds. More recently, pension funds have also started allocating to infrastructure and commodities. Since the beginning of the global financial crisis there has been a noticeable move by pension funds from making allocations to alternatives through funds of funds to a direct fund approach and sometimes co-investments alongside general partners. A number of largest funds are moving towards a model adopted by some large Canadian pension plans where they have built internal teams to invest directly in private equity and infrastructure. While defined benefit (DB) pension funds continue to make significant allocations to alternatives, defined contribution (DC) pension plans have hardly any exposure, mostly driven by regulatory requirements around liquidity and risk. The industry is trying to find solutions which would allow DC pension funds to allocate more capital to alternatives for the benefit of members whose current limited asset class choice is considered a constraint. Future outlook Alternatives continue to provide pension funds with both diversity and additional returns. We expect the trend of increasing allocation to alternatives by pension funds to persist in the medium term. In the longer run, there is likely to be bifurcation. While open pension plans are likely to continue to allocate to alternatives, the participation of DB pension plans is likely to decrease significantly as these plans look to de-risk and gradually wind down their assets. Innovation will be required to provide solutions for the growing DC pension fund market segment. 24

25 Top 100 Alternative Asset Managers by Pension Fund Assets Executive summary Top 100 Alternative Asset Managers Pension fund assets managed by the top 100 alternative asset managers in the sector amount to USD 1,328.2 bn in This represents 53% of their total AuM (USD 2,499.9 bn). Direct Real Estate Funds remain the most popular alternative asset for Pension funds (over 39% of assets) with six such managers in the top ten. It is followed in popularity by Private Equity FoF, Direct Private Equity Funds, Direct Infrastructure Funds and Direct Hedge Funds. Funds of Hedge Funds and Direct Commodities Funds have smaller allocations relative to the other asset classes. Top 100 Average Smallest Largest USD million Pension fund assets 13, , ,076.0 Total assets 24, , ,845.7 Overall Ranking Average Total AuM No. of Funds Pension fund assets 3, ,826,

26 Top 100 Alternative Asset Managers by Pension Fund Assets Distribution by Asset Class 7% 9% 20% 14% 39% 1% 9% Funds of Hedge Funds Direct Hedge Funds Private Equity FoF Direct Private Equity Funds Direct Real Estate Funds Direct Commodities Funds Direct Infrastructure Funds Asset class Pension Fund assets Average Smallest Largest USD million Number of funds Funds of Hedge Funds 90, , , , Direct Hedge Funds 123, , , , Private Equity FoF 260, , , , Direct Private Equity Funds 189, , , , Direct Real Estate Funds 522, , , , Direct Commodities Funds 19, , , , Direct Infrastructure Funds 121, , , , Total 1,328, , , , * Proportions might not sum up to 100% due to rounding 26

27 Top 100 Alternative Asset Managers by Pension Fund Assets Comparison Total Pension Fund assets increased from USD 1,234.0 bn in 2011 to USD 1,328.2 bn in 2012 (nearly 8%). Pension fund asset allocation in alternatives remained broadly similar to the previous year % 10% 18% 14% 40% 2% 9% % 9% 20% 14% 39% 1% 9% Funds of Hedge Funds Direct Hedge Funds Private Equity FoF Direct Private Equity Funds Direct Real Estate Funds Direct Commodities Funds Direct Infrastructure Funds * Proportions might not sum up to 100% due to rounding 27

28 Top 100 Alternative Top 100 Asset Asset Managers by Pension Fund funds Assets AuM Comparison Note: All data in this section refers to Total Assets for of Top 100 Alternative Asset Managers by Pension Fund Assets Funds of Hedge Funds Direct Hedge Funds Private Equity FoF Direct Private Equity Funds Direct Real Estate Funds Direct Commodities Funds Direct Infrastructure Funds Account for 7% of total Pension Fund assets, down from 8% in There are now ten Funds of Hedge Funds managers in the top 100 ranking compared to 18 in Pension Fund assets of those managers that also appeared in the 2011 top 100 ranking increased by over 13%. Account for 9% of Pension Fund assets, a decline of 1% from last year. The number of managers remained constant from 2011 to 2012 at 10. Pension Fund assets of those managers that also appeared in the 2011 top 100 ranking increased by nearly 12%. Private Equity FoF managers have the second largest amount of Pension Fund assets in the survey. There are now 21 managers in this ranking compared to 16 in Pension Fund assets of those managers that also appeared in the 2011 top 100 ranking increased by over 7%. This is a key asset class for Pension Funds having over 14% of assets in this ranking. Pension Fund assets of those managers that also appeared in the 2011 top 100 ranking increased nearly 12% Account for over 35% of Pension Fund assets in this ranking. Pension Fund assets of those managers that also appeared in the 2011 top 100 ranking declined by 3%. There are two managers in this ranking, down from five in 2011, whose Pension Fund assets increased by 11% in Pension Fund assets of those managers that also appeared in the 2011 top 100 ranking increased by around 14%. There are now nine managers in this ranking, down from 11 in

29 Top 100 Alternative Asset Managers by Pension Fund Assets Top 100 Alternative Asset Managers ranked by Total Pension Fund Assets Position Name of parent organisation Main country of domicile Pension AUM (USD million) Total AUM (USD million) Asset Class 1 Macquarie Group Australia 63, , Direct Infrastructure Funds 2 Bridgewater Associates United States 50, , Direct Hedge Funds 3 CBRE Global Investors United States 44, , Direct Real Estate Funds 4 AlpInvest Partners The Netherlands 43, , Private Equity FoF 5 Prudential Real Estate Investors United States 32, , Direct Real Estate Funds 6 TIAA-CREF United States 32, , Direct Real Estate Funds 7 J.P. Morgan Asset Management United States 29, , Direct Real Estate Funds 8 LaSalle Investment Management United States 26, , Direct Real Estate Funds 9 Blackstone Capital Parters United States 26, , Direct Private Equity Funds 10 Deutsche Asset & Wealth Management United States 24, , Direct Real Estate Funds 11 Blackstone Real Estate Partners United States 24, , Direct Real Estate Funds 12 Heitman United States 23, , Direct Real Estate Funds 13 UBS Global Asset Management United Kingdom 23, , Direct Real Estate Funds 14 Blackstone Alternative Asset Management United States 21, , Funds of Hedge Funds 15 HarbourVest Partners United States 20, , Private Equity FoF 16 Principal Global Investors United States 19, , Direct Real Estate Funds 17 Brookfield Asset Management Canada 19, , Direct Real Estate Funds 18 Oaktree Capital Management United States 19, , Direct Private Equity Funds 19 Kohlberg Kravis Roberts United States 19, , Direct Private Equity Funds 20 Credit Suisse Asset Management United States 18, , Direct Real Estate Funds 21 Credit Suisse Asset Management United States 18, , Private Equity FoF 22 Invesco United States 18, , Direct Real Estate Funds 23 Pantheon United Kingdom 17, , Private Equity FoF 24 Bentall Kennedy Canada 17, , Direct Real Estate Funds 25 Apax Partners United Kingdom 16, , Direct Private Equity Funds 29

30 Top 100 Alternative Asset Managers by Pension Fund Assets Top 100 Alternative Asset Managers ranked by Total Pension Fund Assets Position Name of parent organisation Main country of domicile Pension AUM (USD million) Total AUM (USD million) Asset Class 26 Hamilton Lane Advisors United States 16, , Private Equity FoF 27 Adams Street Partners United States 15, , Private Equity FoF 28 Morgan Stanley United States 15, , Direct Real Estate Funds 29 AMP Capital Investors Australia 14, , Direct Real Estate Funds 30 Advent International United States 14, , Direct Private Equity Funds 31 Partners Group Switzerland 14, , Private Equity FoF 32 Aberdeen Asset Management United Kingdom 14, , Direct Real Estate Funds 33 J.P. Morgan Asset Management United States 14, , Private Equity FoF 34 Riverstone Holdings United States 13, , Direct Private Equity Funds 35 BlueCrest Capital Management United Kingdom 13, , Direct Hedge Funds 36 Clarion Partners United States 13, , Direct Real Estate Funds 37 CVC Capital Partners Luxembourg 12, , Direct Private Equity Funds 38 LGT Capital Partners Switzerland 12, , Private Equity FoF 39 Brevan Howard United Kingdom 12, , Direct Hedge Funds 40 AEW Capital Management United States 12, , Direct Real Estate Funds 41 BlackRock United Kingdom 12, , Direct Hedge Funds 42 Goldman Sachs Asset Management United States 11, , Private Equity FoF 43 PIMCO United States 11, , Direct Commodities Funds 44 Providence Equity Partners United States 11, , Direct Private Equity Funds 45 Grosvenor Capital Management United States 11, , Funds of Hedge Funds 46 First Reserve United States 10, , Direct Private Equity Funds 47 Industry Funds Management Australia 10, , Direct Infrastructure Funds 48 Pathway Capital Management United States 10, , Private Equity FoF 49 Henderson Global Investors United Kingdom 9, , Direct Real Estate Funds 50 GE Asset Management United States 9, , Direct Private Equity Funds 30

31 Top 100 Alternative Asset Managers by Pension Fund Assets Top 100 Alternative Asset Managers ranked by Total Pension Fund Assets Position Name of parent organisation Main country of domicile Pension AUM (USD million) Total AUM (USD million) Asset Class 51 Bouwinvest Real Estate Investment Management The Netherlands 8, , Direct Real Estate Funds 52 Mesirow Advanced Strategies United States 8, , Funds of Hedge Funds 53 Standard Life Investments United Kingdom 8, , Direct Real Estate Funds 54 Brookfield Asset Management Canada 8, , Direct Infrastructure Funds 55 The Permal Group United States 8, , Funds of Hedge Funds 56 Cinven United Kingdom 8, , Direct Private Equity Funds 57 Legal & General Investment Management United Kingdom 8, , Direct Real Estate Funds 58 Financial Risk Management United Kingdom 8, , Funds of Hedge Funds 59 SL Capital Partners United Kingdom 8, , Private Equity FoF 60 Deutsche Asset & Wealth Management United Kingdom 8, , Direct Infrastructure Funds 61 Lexington Partners United States 7, , Private Equity FoF 62 Portfolio Advisors United States 7, , Private Equity FoF 63 UBS Global Asset Management United Kingdom 7, , Funds of Hedge Funds 64 Hermes Real Estate Investment Management United Kingdom 7, , Direct Real Estate Funds 65 Warburg Pincus United States 7, , Direct Private Equity Funds 66 Gresham Investment Management United States 7, , Direct Commodities Funds 67 BlackRock United Kingdom 7, , Direct Real Estate Funds 68 Alinda Capital Partners United States 7, , Direct Infrastructure Funds 69 Global Infrastructure Partners United States 7, , Direct Infrastructure Funds 70 Bridgepoint United Kingdom 6, , Direct Private Equity Funds 71 GoldenTree Asset Management United States 6, , Direct Hedge Funds 72 Bain Capital United States 6, , Direct Private Equity Funds 73 Pacific Alternative Asset Management Company United States 6, , Funds of Hedge Funds 74 DTZ Investment Management United Kingdom 6, , Direct Real Estate Funds 75 Abbott Capital Management United States 6, , Private Equity FoF 31

32 Top 100 Alternative Asset Managers by Pension Fund Assets Top 100 Alternative Asset Managers ranked by Total Pension Fund Assets Position Name of parent organisation Main country of domicile Pension AUM (USD million) Total AUM (USD million) Asset Class 76 AXA Private Equity France 6, , Private Equity FoF 77 The Rock Creek Group United States 6, , Funds of Hedge Funds 78 PIMCO United States 6, , Direct Hedge Funds 79 PIMCO United States 6, , Direct Real Estate Funds 80 Goldman Sachs & Co United States 6, , Direct Infrastructure Funds 81 Nephila Capital Bermuda 6, , Direct Hedge Funds 82 TIAA-CREF United States 5, , Direct Private Equity Funds 83 Lend Lease Group Australia 5, , Direct Real Estate Funds 84 QIC Australia 5, , Direct Real Estate Funds 85 Coller Capital United Kingdom 5, , Private Equity FoF 86 Aviva Investors United Kingdom 5, , Direct Real Estate Funds 87 Cornerstone Real Estate Advisers United States 5, , Direct Real Estate Funds 88 Capital Dynamics Switzerland 5, , Private Equity FoF 89 Hines United States 5, , Direct Real Estate Funds 90 Siguler Guff & Co United States 5, , Private Equity FoF 91 K2 Advisors United States 5, , Funds of Hedge Funds 92 Schroders Investment Management United Kingdom 5, , Direct Real Estate Funds 93 AMP Capital Investors Australia 5, , Direct Infrastructure Funds 94 Hastings Funds Management Australia 5, , Direct Infrastructure Funds 95 Gottex Fund Management Switzerland 5, , Funds of Hedge Funds 96 D. E. Shaw Group United States 5, , Direct Hedge Funds 97 Lyxor Asset Management France 5, , Direct Hedge Funds 98 BlackRock United Kingdom 5, , Private Equity FoF 99 Beach Point Capital Management United States 5, , Direct Hedge Funds 100 Hermes GPE United Kingdom 5, , Private Equity FoF Total 1,328, ,499,

33 Total Universe Pension Fund Assets Five-year comparison Managers that have participated for the past five years Index Dec 2008 = AuM Variation Pension fund assets of the 22 Funds of Hedge Fund Managers that have participated in the last five years has risen steadily since Pension fund assets of the 24 Private Equity FoF Managers that have participated in the last five years has grown significantly since 2008 (ignoring a small decrease in 2009). Pension fund assets of the 34 Direct Real Estate Fund Managers that have participated in the last five years have been volatile, falling in 2009 followed by a rise in 2010, maintaining that level in 2011, and falling again in Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Funds of Hedge Funds Direct Real Estate Funds Direct Infrastructure Funds Private Equity FoF Direct Commodities Funds Pension fund assets of the 9 Direct Commodities Fund Managers that have participated in the last five years have had the biggest variation, increasing by 146% in 2010 but then remaining steady. Pension fund assets of the 18 Direct Infrastructure Fund Managers that have participated in the last five years have been growing steadily at an average of around 36%. 33

34 Section 3.B Top 25 Alternative Asset Managers by Insurance Company Assets

35 Top 25 Alternative Asset Managers by Insurance Company Assets Insurance Insights Evolving alternatives landscape Life insurers have been increasing their focus on, and allocation to, alternatives over the last few years, and the trend has been underlined by the economic environment and regulatory changes, including Solvency II. Continued low bond yields have been another key catalyst for increasing investor interest in alternative asset classes. Future outlook We expect the impact of these themes to grow in significance over the next few years, for three main reasons: Institutional familiarity arising from already having made initial allocations Existence of better value, more-aligned fee propositions for these assets Continued need for better risk-adjusted returns The alternatives universe is diverse, and there are micro preferences for some asset classes over others. Insurance companies prefer longer term, secured, yield producing assets (eg, infrastructure), real assets that provide an illiquidity premium (eg, real estate) and pooled funds which are transparent and insurance-reporting friendly. 35

36 Top 25 Alternative Asset Managers by Insurance Company Assets Executive summary Top 25 Alternative Asset Managers Insurance company assets managed by the top 25 managers in the sector amounted to USD bn in Direct Real Estate Funds represent the largest block of alternative assets for Insurance companies (over 73%) followed by Private Equity FoF, Funds of Hedge Funds, Direct Private Equity Funds and Direct Infrastructure Funds. In this dataset, there was no investment in Direct Hedge Funds or Direct Commodities Funds by Insurance companies. Top 25 Average Smallest Largest USD million Insurance Company assets 9, , ,068.2 Total assets 31, , ,845.7 Overall Ranking Average Total AuM No. of Funds Insurance Company assets 1, ,

37 Top 25 Alternative Asset Managers by Insurance Company Assets Distribution by Asset Class 6% 15% 4% 73% 2% Funds of Hedge Funds Private Equity FoF Direct Private Equity Funds Direct Real Estate Funds Direct Infrastructure Funds Asset class Insurance Company assets Average Smallest Largest USD million Number of funds Funds of Hedge Funds 14, , , , Private Equity FoF 37, , , , Direct Private Equity Funds 9, , , , Direct Real Estate Funds 179, , , , Direct Infrastructure Funds 3, , , Total 243, , , ,

38 Top 25 Alternative Asset Managers by Insurance Company Assets Top 25 comparison Insurance company assets increased from USD bn in 2011 to USD bn in Insurance companies tend to focus on Direct Real Estate and that trend has remained consistent. There are 5 new responses in the top 25, insurance company assets from those managers account for near USD 47.0bn (19% of total Insurance company assets on top 25). Total Insurance company assets for managers who were in the top 25 ranking for both 2011 and 2012 increased almost 14% % 11% 8% 74% 2% % 15% 4% 73% 2% Funds of Hedge Funds Private Equity FoF Direct Private Equity Funds Direct Real Estate Funds * Proportions might not sum up to 100% due to rounding Direct Infrastructure Funds 38

39 Top 25 Alternative Asset Managers by Insurance Company Assets Top 25 Alternative Asset Managers ranked by Insurance Company Assets Position Name of parent organisation Main country of domicile Insurance AUM (USD million) Total AUM (USD million) Asset Class 1 AXA Real Estate France 47, , Direct Real Estate Funds 2 Cornerstone Real Estate Advisers United States 33, , Direct Real Estate Funds 3 M&G Investments United Kingdom 26, , Direct Real Estate Funds 4 AXA Private Equity France 12, , Private Equity FoF 5 Principal Global Investors United States 12, , Direct Real Estate Funds 6 Aviva Investors United Kingdom 11, , Direct Real Estate Funds 7 CBRE Global Investors United States 10, , Direct Real Estate Funds 8 AEW Capital Management United States 9, , Direct Real Estate Funds 9 Capital Dynamics Switzerland 6, , Private Equity FoF 10 BNP Paribas Real Estate France 6, , Direct Real Estate Funds 11 BlackRock United Kingdom 5, , Private Equity FoF 12 Blackstone Alternative Asset Management United States 5, , Funds of Hedge Funds 13 Aberdeen Asset Management United Kingdom 5, , Direct Real Estate Funds 14 Invesco United States 5, , Direct Real Estate Funds 15 AXA Private Equity France 5, , Direct Private Equity Funds 16 Amundi Alternative Investments France 4, , Funds of Hedge Funds 17 HarbourVest Partners United States 4, , Private Equity FoF 18 SWIP United Kingdom 4, , Direct Real Estate Funds 19 Henderson Global Investors United Kingdom 4, , Direct Real Estate Funds 20 Blackstone Capital Parters United States 4, , Direct Private Equity Funds 21 PineBridge Investments United States 4, , Private Equity FoF 22 AXA Investment Managers GS United Kingdom 4, , Funds of Hedge Funds 23 Standard Life Investments United Kingdom 3, , Direct Real Estate Funds 24 Macquarie Group Australia 3, , Direct Infrastructure Funds 25 Partners Group Switzerland 3, , Private Equity FoF Total 243, ,

40 Section 3.C Top 25 Alternative Asset Managers by Sovereign Wealth Fund Assets

41 Top 25 Alternative Asset Managers by Sovereign Wealth Fund Assets Sovereign Wealth Fund Insights Evolving alternatives landscape Sovereign Wealth Funds remain a difficult investor group to analyse given how disparate their social and economic goals tend to be. In essence, most Sovereign Wealth Funds are aiming to get more diversity in their asset allocation via alternative asset classes and through the internationalisation of their asset base. However, some are still focussing only on local and mainstream investments. Future outlook Sovereign Wealth Funds with sufficient scale are working towards accessing alternative assets directly without the intermediary function of alternative asset fund managers. Many Sovereign Wealth Funds are strengthening their internal investment capabilities to be able to expand the scope of what they are able to access directly, without outsourcing to third party asset managers. More broadly, alternative asset managers will continue to attract capital from the small and medium size Sovereign Wealth Funds. We also expect Sovereign Wealth Funds to continue diversifying into other alternative asset classes beyond real estate and private equity. 41